An impending decision on whether or not China’s $6.1tn onshore equity markets should start to be included in the flagship emerging market index is starting to reverberate around the region.
South Korea and Taiwan are stepping up their efforts to be promoted from the MSCI EM index to its developed world equivalent. And in the case of Seoul, at least, the fear of an exodus of foreign capital in the wake of China’s admittance appears to be a driving factor.
At present China, through the Hong Kong market and the American depositary receipts of US-listed companies such as Alibaba, accounts for 24 per cent of the MSCI EM index, with South Korea and Taiwan the next largest constituents, at 16 per cent and 12 per cent respectively.